The central bank of the Philippines held its benchmark overnight borrowing rate steady at 3.50 percent, as expected, and said the balance of risks to its inflation outlook were still to the upside given the potential rise in food prices after recent typhoons and higher utility rates.
But the Central Bank of the Philippines (BSP) said the path of inflation, including a recent rise in forecasts, was still within its target range as the impact from Typoon Haiyan, higher oil prices and utility rates were deemed to be transitory.
The Philippines inflation rate rose to 3.3 percent in November from October's 2.9 percent for an average 2.8 percent in the first 11 months, still well within the central bank's target range of 4.0 percent, plus/minus one percentage point for this year and 2014. In 2015 the bank targets inflation of 3.0 percent, also within a one percentage point band.
The central bank has said the economic impact of Typoon Haiyan, which hit the Philippines on Nov. 8, would be manageable and growth would still hit government targets of 6-7 percent growth and there was little need for additional policy easing. Inflation is seen rising to around 4 percent next year.
The country's Gross Domestic Product grew by 1.10 percent in the third quarter from the second for annual growth of 7 percent, down from 7.6 percent.
"While global economic conditions could be challenging, prospects for domestic activity are expected to stay firm, supported by buoyant domestic demand as well as favorable consumer and business sentiment," the BSP said.